Zambia is a multi-party democracy and provides a market oriented liberalized economic environment. The Zambian Government welcomes all investors and has designed a package of incentives aimed specifically at creating a sound investment climate for increased domestic economic growth.
The country’s central location in the region as well as combination of following key strengths makes Zambia an ideal investment destination.
- Abundance of natural resources and labour, which are highly under-utilized
- Continuous political stability since attaining independence in 1964
- Abolition of Controls -Price, Interest Rate, Foreign Exchange and free repatriation of earnings and repayments
- Guarantees and Security to investors with statutory rights to full and fair compensation
- Duty Free Access to Regional, wider African and the USA markets under SADC, COMESA/FTA, AGOA (African Growth and Opportunity Act), and Cotonou Agreements respectively
- Banking, Financial, Legal and Insurance services of international standard as well as a Stock Exchange
- Double Taxation Agreements with number of European, North American, African and Asian countries
- Attractive place to work and live – sub-tropical climate and vegetation with plenty of water and electricity.
- Friendly people, mostly English speaking with high literacy rate.
- Educational establishments to University level.
- Strong religious values.
- Open-air lifestyle with nature reserves, game parks, rivers, lakes and waterfalls.
- Thriving Private Sector – Government has successfully privatized most of the previously state owned enterprises thus encouraging an entrepreneurial spirit.
The Investment Act of 1993 (amended 1st April 1996) offers a wide range of incentives in the form of tax allowances, exemptions & concessions for companies, which include:
- Buildings for Manufacturing, Mining and Hotels enjoy initial allowance of 10% and an annual 5% wear & tear Allowance of the cost.
- Machinery for Farming, Tourism and Manufacturing qualify for wear & tear allowance of 50% per annum for the first two years.
- Dividends from farming exempt from tax for first 5 years
- Capital Expenditure on farm Improvements -20% per year write off for the first 5 years
- Farm Works Allowance – 100% write off on stumping, clearing, prevention of soil erosion, boreholes, wells, water conservation and aerial or geographical surveys.
- Customs Duty Exemption on machinery and equipment for mining and agriculture
- Duty Free Imports of organic and inorganic chemicals, rubber, steel and plastics; most other inputs at 5%.
- Customs Duty on Intermediate Goods 15% and on Finished Goods 25%.
- Specific sector-related fiscal incentives and duty/tax concessions packaged for the Mining, Manufacturing, Agriculture, Tourism and Energy sectors.
Some incentives relating to investments on the Lusaka Stock Exchange (LuSE):
- Corporate Tax reduced to 33% compared to normal 35%
- Foreign Ownership – No restrictions on ownership levels
- Shareholder Levels – No restrictions on shareholder levels
- No Capital Gains T
Source: Small and Medium Enterprise Toolkit for Zambia (SME Toolkit for Zambia)